2016 Global Property Performance
Research Paper
July 28, 2017
Preview
Global property held directly by private investors delivered a total return of 7.4% in 2016, marking the seventh consecutive year of positive performance since the global financial crisis (GFC). However, global momentum was negative, the return coming down from 10.7% in 2015.
While still positive, global capital growth more than halved in 2016 to 2.5% from 5.4% the previous year, potentially indicating that a turning point may have been reached. Despite the slower capital growth, yields in many markets continued to tighten and the income return on the Global Annual Property Index fell below 5% in 2016 for the first time since its inception.
Sweden was the best performing market in 2016, with a total return of 13.9%. After Sweden, the next best performers were Spain (13.3%) and Ireland (12.4%). The worst performer in 2016 was the U.K., where the Brexit shock had a negative impact on capital values and contributed to a total return of just 3.9% for the year.
The structural dynamics of real estate have attracted a wave of capital in this cycle, which has propelled the asset class through a period of strong performance. The appeal of the asset class was initially cyclical, as depressed prices attracted capital in the immediate aftermath of the GFC. In a typical cycle, tightening real estate yields would have slowed the flow of capital, but in recent years, record-low bond yields and financing costs have kept spreads attractive.
Read the full paper
Read the full paper
Provide your information for instant access to our research papers.
The content of this page is for informational purposes only and is intended for institutional professionals with the analytical resources and tools necessary to interpret any performance information. Nothing herein is intended to recommend any product, tool or service. For all references to laws, rules or regulations, please note that the information is provided “as is” and does not constitute legal advice or any binding interpretation. Any approach to comply with regulatory or policy initiatives should be discussed with your own legal counsel and/or the relevant competent authority, as needed.